Hawaii In Crisis

Governor Cayetano calls it the worst economic crisis in the state's history and it seems clear the impact of last week's terrorist attacks will be felt in Hawaii for months to come.

The latest PKF Hawaii survey shows that 80% of the hotel rooms in Waikiki were filled last month. The last time Hawaii saw a drop like this was back in 1991 when the Gulf War started. It was a struggle for Hawaii's economy to recover. Now one local business expert says it will take that kind of effort to recover from this crisis.

It's easy to think of the planes as half empty these days. Waikiki and its beaches are certainly less than half full - less than a month after the hotels ran at 80% occupancy. That all leads to one conclusion.

"It certainly shapes up as a year of no growth for Hawaii's economy next year. It could be a little worse than that," says David McClain, University of Hawaii business dean.

Even if you don't work in the visitor industry, tourism makes up so much of Hawaii's business that this impact can be felt rippling throughout Hawaii's economy. Not all retailers depend on tourism, but they do rely on Christmas. And with so much uncertainty, consumers may think twice before picking up any electronics or other expensive gifts this holiday season.

"This is something that could last a couple years. And in that sense people need to have that mindset that this isn't going to go away quickly," says McClain.

Two days ago Governor Cayetano and a panel of business leaders announced a sweeping plan to kick start business.

"The landing fees initiative makes a lot of sense. Calling the legislature back in to session so we can think more clearly about some medium term measures, I think that makes a lot of sense as well," says McClain.

The last time Hawaii's visitor industry suffered this kind of hit - war broke out in the Middle East. The lessons learned from that experience should serve the state well this time around.

"Anybody who was left in Hawaii was a good businessman, because it really was a decade of stagnation."

The visitor industry had been having a strong year, but it was slightly down when compared to the records posted in 1999. Still, August was the seventh consecutive month that hotel occupancy dropped. It's a safe bet that those numbers will be down for September as well. .